Corrected: Factbox: Cubans rush at chance to open new businesses

4 Min Read

(Adds dropped word Cuba in 1st paragraph)

HAVANA (Reuters) - Thousands of new businesses are opening in Communist-led Cuba as the government relaxes restrictions on private ventures and prepares to lay off up to a million public sector workers in the biggest jobs shake-up in decades.

President Raul Castro’s government unveiled plans in September to expand the private sector by allowing new or additional opportunities in 178 activities ranging from food and wine sales to animal training.

Below are some details about the new system:

* Starting in October, the government began issuing permits for “self-employment,” which includes small businesses, to create jobs for some of 500,000 state employees to be laid off by March in a cost-cutting measure. At least a million people are expected to lose state jobs in the next few years. At the last count, 75,000 permits had been handed out with minimal bureaucracy and thousands more are being issued each week.

* Prior to this opening of the economy, Cuba had 591,000 people working outside of the public sector, a number that includes mostly family farmers, plus 143,000 licensed self-employed. About 85 percent of Cuba’s labor force of 5 million people work for the state. For the first time in decades, private businesses will be allowed to hire staff.

* The 178 activities being authorized cover many basic services such as construction, home and car repairs, haircuts, transportation, and food service, but also includes things like clowns, massages, button wrappers, umbrella repair, palm tree trimmers and caretakers of public restrooms.

* Over the past two years, 128,000 people have been given permits to work previously abandoned farmland. The vast majority of those people have little previous experience in agriculture. So far, most of the 1.2 million hectares (3 million acres) handed out are still not producing crops but are being “prepared,” the government says.

* Hundreds of private restaurants, known as “paladares,” have sprung up in recent weeks. The restaurants are allowed to employ staff for the first time and their size limit expanded to 20 seats, although the current limit of 12 was already widely ignored in popular paladares. The restaurants are also allowed to legally offer dishes including potatoes, shellfish and beef, previously forbidden, but usually available.

* Cubans in the country and those living abroad with the government’s permission are now able to rent out their homes.

* According to Communist Party documents leaked earlier, business owners will have to pay 10 percent to 40 percent of their gross income in taxes, depending on their occupation, plus another 25 percent for the national social security system. However, tax deductions are also being increased and some businesses say they expect to pay less than before.

* Cuba’s central bank is studying the possibility of offering credit to the new businesses, but remittances from abroad are expected to fund many of them, especially after U.S. President Barack Obama this month relaxed the rules on sending cash to Cuba. An estimated $1.2 billion in remittances flowed into the country in 2009, the majority of it from the United States, where 1.5 million Cubans reside.

* The government initiated a broad attempt to develop the private sector during the post-Soviet financial crisis of the 1990s, but backtracked as soon as the economy improved.